Cultural Currency

A trillion reasons to market to Hispanics

In 1987, not long after Alex and Cathy López Negrete moved their fledgling advertising agency, Third Coast Marketing, out of their Alief kitchen and into an office, they got a call from The Metropolitan Transit Authority of Harris County. The MTA had a problem: Hispanic ridership was abysmally low, but nobody knew why. And so, Alex López Negrete and a handful of his employees began riding buses all over the city, interviewing as many Hispanic riders as they could. They did this for months.

It turned out that despite serving a county with 500,000 Hispanics, the MTA had neither Spanish-language customer-service operators nor bilingual drivers. Further contributing to the confusion were the bus routes themselves. In Latin America, López Negrete learned, buses commonly travel strict north/south or east/west routes. In Houston and other American cities, the routes are far more unpredictable.

“So people would catch the bus on Westheimer thinking they were going to go downtown,” López Negrete says. “Now, all of a sudden the damn thing turns on Hillcroft, and then it turns again on Bellaire! For Hispanic riders this was madness.”

The 53-year-old Alex López Negrete tells us all this from his office, surrounded by expensive guitars, modern art, and 215-gallon fish tank overlooking a sleek black conference table. With a closely cropped beard and trim charcoal suit, he looks every bit the seasoned President and CEO. Third Coast Marketing is now Lopez Negrete Communications, and it’s the largest independently owned Hispanic marketing company in the United States. With 200 employees and last year’s capital billings topping $190 million, the Alief kitchen is a distant memory. The company now occupies an 80,800-square-foot office building on Richmond Avenue and Buffalo Speedway.

“I just saw a need,” Alex López Negrete says. “I thought: Wow, my community is very, very underserved. The creative work is not good—it’s not strategic—and, you know, this community deserves to be marketed to with good work, with respectful work.”

Indeed, he says that when he and his wife first started out, in 1985, most of the local ads targeting Hispanic consumers were for used cars and lawyers. Now, “We’re no longer playing in the kiddie pool,” López Negrete says. “When you have the tipping point we’re enjoying right now—where Latinos are driving culture and the bulk of the growth in this nation is Hispanic —all of a sudden as a Hispanic marketer you’re playing in the big pool.”

This moment has been a long time coming. “The last couple of elections were wake-up calls for a lot of people, but salsa has been outselling ketchup for 20 years,” says Hispanic marketing guru Joe Kutchera, the author of Latino Link: Building Brands Online With Hispanic Communities & Content. “Culture is harder to see, and it takes a lot longer to grasp its trajectory, but what we’re seeing now is the Latinization of the U.S.”

The López Negretes met in 1978, when Alex was at the University of Houston (he moved here from Mexico at 18), Cathy was at St. Thomas, and they both worked at Warehouse Records on Fondren. After graduation, they spent several years pursuing advertising careers. He got a job in radio, where he noticed how few quality commercials targeted Hispanics.

“Early on, he was able to identify a niche that wasn’t being catered to,” says Jay Hagins, the longtime executive director of the American Advertising Federation’s Houston chapter. “And he knew he could access that niche better than anyone else.”

The couple married in 1981 and started Third Coast in ’85. Cathy López Negrete, 53, says that the fact that they were young, penniless, and nimble—unestablished—was an asset in its way. “It’s a lot easier to start a general-market agency where you don’t have to prove yourself every time and there’s much less risk,” she says.

It’s been a joint venture from the beginning, and today, in addition to serving as the agency’s CFO, Cathy López Negrete is heavily involved with human resources and business decisions. “I’m the money and people girl,” she says. “Each day is different, but I love chaos.”

The business grew incrementally for a while. For instance, among the things Alex López Negrete discovered while riding buses for the MTA team was that Hispanic riders were often taking trips to Fiesta Mart. The firm approached the supermarket with the idea of creating a partnership with METRO, allowing the agency to put a module in each store that sold bus tokens and provided route information. The two even agreed to partner on bus stops at new stores.

“It was magic,” Alex López Negrete says. “So much so, that Fiesta loved what we did, and Fiesta said, ‘Hey kid, we could use a little help, too.’”

Jobs with Compaq, Sunbelt Bank, Univision, Goya Foods, and, eventually, Walmart followed. It was in 1989 that the agency became Lopez Negrete Communications to signal its complete focus on the Hispanic market. But even as the firm gained national clients, it benefited from having the Bayou City as its home base. “Houston has been a very good secret weapon for us,” he says. “Why? It’s an enormously diverse market and a mirror to multicultural America.”

We keep hearing that Hispanics are the fastest-growing segment of the U.S. population; they control $1 trillion in annual buying power in the United States, according to the Selig Center for Economic Growth, and that number is projected to grow to $1.5 trillion—roughly the size of Mexico’s economy—by 2015. So you’d think that López Negrete would no longer need to convince potential clients of the vast untargeted market sitting right under their noses.

But even now, many potential clients have trouble seeing how much the country’s demographics have changed. “If you would’ve said in 1985, ‘Guess what, Alex? Twenty-eight years from now, you’re still going to have to pull out the soap box and cite census data,’ I would have said ‘you’re crazy,’” López Negrete says. “Believe it or not, you still gotta do it.”

And even when presented with such data, some still choose to ignore it. “It gets frustrating when people don’t want to have the conversation,” he says. “If they’re interested in the conversation I’ll have it all day long. I’m proud of the growth of this community. It’s when people don’t want to listen that I get frustrated.”

But more clients are listening every day, and over the last decade López Negrete Communications has added companies like Verizon, Microsoft, Dr Pepper, Kraft Foods, and NBC Universal to its roster of big-name clients. Meanwhile, the business has shifted from traditional advertising to the world of online analytics, video, and smartphones.

These days, Alex López Negrete says, the savviest businesses know that there is no such thing as the “typical” Hispanic consumer, which he counts as progress. In turn, he says, his agency’s goal is to determine which segment of the Hispanic market is right for each company. Not only does the firm take country of origin into account when devising strategies, but different generations within them.

“When we started we were focused on people who weren’t assimilated,” Cathy López Negrete says. “Now people are proud of their heritage, and we are dealing with second- and third-generation Hispanics. That means we have to be even more aware of the demographics today.”

How things have changed. “Back in the ’70s and ’80s, you had Jorge Flores, who found the need to call himself George Flowers because it was not cool to be Latino, because it was difficult,” Alex López Negrete says, using a random name to illustrate his point. “Today, guess what? Jorge Flores is being paid attention to. That cultural currency is really, really important. Being Latino today is very, very different than being Latino before.”